Right charge, wrong example

Obama is running an ad attacking McCain for proposing a $4 billion tax break for oil companies right when their profits are way up, and noting that McCain has just gotten $2 million in oil company executive campaign contributions.

I gather the $4 billion is computed simply by applying to the oil companies McCain's proposal to lower the corporate tax rate to 25 percent.

The actual story here is that McCain and/or the RNC got a huge flood of oil company campaign contributions (e.g., from 10 Hess Company executives each of whom gave the max) in the almost immediate aftermath of his flip-flop on offshore oil drilling. No doubt they are also grateful for his gas tax holiday demagoguery given the likelihood that they would pocket the benefit. But in fact their share of the corporate rate cut is not from a proposal that was aimed at them; rather, it's one applying more generally.

Presumably the ad uses the $4 billion figure taken from the general corporate rate cut proposal because the other items are harder to explain non-distractingly in a 30-second narrative.

A bit of an irony here for me is that I personally would favor the corporate rate cut if (a) fully financed so that it does not increase the fiscal gap and (b) accompanied by rules limiting the use of the corporate form as a low-rate tax shelter for high-income individuals (e.g., use of "reasonable compensation" rules to prevent under-payment of salary for tax purposes to high-bracket owner-employees). And I suspect I would oppose Obama's proposed windfall profits tax for oil companies, which the commercial also touts, if I knew more of the details - these tend to be gimmicky and not very good tax instruments.

The basic point of the commercial is important and correct, however, even if its policy content is questionable. McCain is in the tank (so to speak) for the oil companies in ways that lead him to make consciously dishonest proposals to benefit them, e.g., rationalizing the offshore oil drilling in terms of the price of gas when its effect on prices would be so deferred and trivial. And this is a relevant character issue, not just a policy issue.